Microsoft-Yahoo Search Deal On Track For Completion

According to AllThingsD the MicroHoo search deal is nearing completion and “definitive agreement” status. Speculation that the deal was in trouble started happening when the two companies failed to meet their self-imposed October 27 deadline to finalize the complex agreement. However it appears the circumstances were just as reported in the parties’ 8-K filing with the US Securities & Exchange Commission:

The Letter Agreement specified that the parties would execute Definitive Agreements by October 27, 2009, but given the complex nature of the transaction, there remain some details to be finalized. The parties are working diligently on finalizing the agreements, have made good progress to date, and have agreed to execute the agreements as expeditiously as possible . . .

On the regulatory front AllThingsD reports that “several sources said, those government approvals are now nearing completion at the Justice Department, even though the Federal Trade Commission might still ask for more assurances on privacy issues related to online advertising and consumer data.” Europe must also approve the deal.

According to the most recent comScore search market share data, the combined reach of MicroHoo search would be 27.9% vs. Google’s 65.4%. Assuming the deal goes through up next for Microsoft would be a decision about whether to attempt to buy Ask, which IAC’s Barry Diller is open to selling, and whether to bid for AOL’s search-ad business when that deal comes up for renewal in 2010.

However a MicroHoo approval would potentially make a later Ask acquisition (or maybe even an AOL deal) harder because it would reduce the number of independent search engines in the market.

About The Author

Greg Sterling is a Contributing Editor at Search Engine Land. He writes a personal blog, Screenwerk, about connecting the dots between digital media and real-world consumer behavior. He is also VP of Strategy and Insights for the Local Search Association. Follow him on Twitter or find him at Google+.

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According to news sources, AOL’s deal with Google runs out on December 17 and they have asked for (and received) special dispensation from the SEC to say nothing about what happens next.

Ask’s CEO Doug Leeds says the company is not up for sale.

And there has been a fair amount of opposition to the MicroHoo deal that made its way to the Department of Justice. I’m not holding my breath on any issues but the news media seems to be downplaying the opposition more than they should.

Consumers and advertisers alike will lose out if the deal goes through as presented, as it will only serve to drive up advertising costs on the combined network and eliminate an organic search algorithm from consumers’ available resources.

Yahoo!’s search share (as reported through these bogus pageview-based statistics) is already in decline, so the deal won’t bring any benefit to Microsoft at all in that respect. As the search brands that Yahoo! bought up died, so the Yahoo! search brand will also probably die.

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